Exelon CEO talks nuclear plant preservation, Pepco Holdings merger

Exelon (NYSE:EXC) said April 29 that it expects to invest $16bn the next five years to update energy infrastructure mostly on its regulated utility side — and it is hopeful of closing a major merger and seeing nuclear-friendly legislation pass in Illinois this year.

Illinois low-carbon portfolio standard has cleared a key committee and soon go to the Illinois Senate floor, Exelon President and CEO Christopher Crane said during an earnings conference call. The measure has been proposed to properly recognize the carbon-free baseload generation value of nuclear power, backers say.

Exelon remains “cautious but positive” about getting legislation passed this session, Crane said.

If the Illinois measure does not get passed during the ongoing regular session, it could be addressed during a roughly week-long veto session this fall, Exelon officials said.

Elsewhere, Exelon continues to work with Rochester Gas & Electric (RG&E) to secure an agreement to keep the Ginna nuclear plant running in the State of New York. The New York State Public Service Commission will hold public statement hearings on a proposal for a Reliability Support Services Agreement (RSSA) between an Exelon subsidiary and RG&E that would keep open the nuclear plant in Wayne County, N.Y.

On the non-regulated front, Exelon reported some unplanned nuclear outages that affected revenue. Meanwhile, Exelon’s utilities benefitted from colder-than-normal weather, no severe storms, and increased distribution revenues.

Natural gas prices declined, power prices were relatively flat, and heat rates expanded during the quarter. Due in part to coal plant retirements, Exelon expects much “upside” in power prices in 2016 and 2017, officials said.

Exelon feels good about its combined-cycle gas plant that it is developing in the Electric Reliability Council of Texas (ERCOT), officials said. The same goes for a peaker plant being developed in New England. Exelon is also continuing to pursue various wind and solar power projects, officials said.

Exelon expects to close Pepco merger later this year

Exelon expects to close its proposed merger with Pepco Holdings (NYSE:POM) “late in the second quarter or in the third” quarter, Crane said during the company’s 1Q15 earnings conference call.

“[W]e’ve obtained regulatory approval from FERC, Virginia and New Jersey,” he said. “We’ve reached a global settlement in Delaware that is pending commission approval. That leaves Maryland and the District of Columbia. In Maryland, we’ve reached a partial settlement with several critical parties … – we presented that settlement to the Maryland Public Service Commission and expect a decision from them on May 15.”

Following the completion of evidentiary hearings, District regulators will begin deliberations, Crane said.

“We have said from the beginning that this merger and the commitments we have made clearly demonstrate this merger is in the public interest and should be approved by the regulatory commissions,” he said. “While there is no guarantee that [regulators] will approve the proposal and there is no guarantee they will not impose conditions that would frustrate the transaction, we believe the settlement and commitments we have made in the proceeding … more than meet the statutory requirements for merger approval and we look forward to orders approving the merger.”

From a reliability perspective, Crane said that Exelon is pleased that FERC has granted the waiver to allow PJM Interconnection to delay the capacity auction in order to further review PJM’s capacity performance product proposal, adding, “We look forward to a positive outcome.”

PECO, based in Philadelphia, is the largest electric and natural gas utility in Pennsylvania, serving about 1.6 million electric customers and more than 500,000 natural gas customers in southeastern Pennsylvania, according to the company’s website.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.